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Rachel M. Wasser Director of Investment Operations Cambridge, MA [email protected] PRIME Coalition Charitable capital for early-stage innovation Bioeconomy 2017 July 12, 2017
Rachel M. WasserDirector of Investment Operations
Cambridge, [email protected]
PRIME Coalition
Charitable capital for early-stage innovation
Bioeconomy 2017July 12, 2017
Climate change is one of the most important, complex, and urgent
social problems of our time.
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The capacity of all wind power ever installed globally
= 1 Gigaton
The human race must emit 70 Gigatons LESS on an annual basis
by 2050
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There are capital gaps and financial friction points all along the innovation and deployment pipeline.
Source: Jesse Jenkins et al, Breakthrough Institute, November 2011
There is a surplus of early-stage ideas that could become commercially successful companies.
Our 2016 Pipeline Partners (below) helped us build the PRIME Registry of 1,636 early-stage ventures in the U.S. alone (across energy, agriculture, waste and water).
4
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No one is willing to go first in supporting new climate ventures.
Q2,Q3&Q42016
DATA SOURCES:
$0initial
investment
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Venture CapitalLong-term financial
instruments (e.g. bonds)GovernmentPhilanthropic
capital
Company-buildingability
High risk
Long time horizon
Philanthropists are uniquely positioned to fill the capital gap – no one else is going to step in.
Sources: Merrill Lynch, SSIR, Forbes, Bloomberg, Philanthropy Journal, NP Trust, Wikipedia
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The marketplace of charitable investors is large, but also idiosyncratic, fragmented,
and inaccessible to energy innovators.
Assets
Private Foundations
Donor Advised Funds (DAFs)
Corporate Giving
Annual grants
< .01% of all grants went to
energy innovation in 2014$70B$600B
$50B$13B $19B
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High barriers prevent philanthropists from investing directly into early-stage ventures today.
I thought that’s what venture capital was doing.
I didn’t know I could use my grant dollars to make
for-profit investments.
My grant team is not organizationally structured to behave like a for-profit
investment firm.
I’m inundated with investment opportunities and it’s very difficult to know which might actually need
philanthropic intervention.
Once I find a company I might want to support, I can’t convince my own accountants, attorneys and advisors
to let me do it with charitable capital.
I don’t know where to look for co-investors or follow-on
investors – I don’t want to be out on a limb by myself.
I’m not a technical expert – I need support on technical due
diligence. How much would that cost to do right?
How can I be sure that this is the best use of my
philanthropy, or that a specific investment might actually help
solve the climate problem?
Is it true that there are good investments dying
on the vine?
I can’t find any examples of other grant-makers
making investments like this in the field.
Would I potentially get in trouble with the IRS if I break
the rules? How can I know with certainty that something
qualifies as charitable?
Quotes recorded during PRIME market research, 2013.
• FOUNDATIONS
• GRANTMAKING PUBLIC CHARITIES
• DONOR ADVISED FUNDS
• OTHER ACCREDITED INVESTORS
Channel Partners• Membership Groups• Multi Family Offices • Trade Groups• Government Conveners• DAF sponsors• Wealth Advisors
Pipeline Partners• Incubators• Accelerators• Business plan competitions• Government grantmakers• Universities
FOR-PROFIT CLIMATE
INNOVATORS
PRIME was founded in 2014 to lower the barriers that currently prevent
philanthropic investment to climate innovation.
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PRIME COALITION(501c3 public charity)
We scour the U.S. to make our Investment Funnel as comprehensive as possible, harnessing the expertise of the leading investors to optimize for:
Comprehensive U.S. Registry of early-stage companies across energy, agriculture, waste and water
Company-by-company climate impact assessments
Chairman’s Working Group Quality Control
Investment Committee Deliberations
On-site due diligence
January-April2016
May-June2016
July2016
August-September2016
October-December2016
January-February2017
Final docket production
1 CLIMATE IMPACT 2 ATTRACTIVENESS TO COMMERCIAL INVESTORS 3 FITNESS FOR CHARITABLE CAPITAL
1,636
52
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Annual “docket” of PRIME opportunities
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PRIME’s Investment Committee assesses traditional venture criteria and qualifies charitability.
Representation from
• Bill and Melinda Gates Investments
• Breakthrough Energy Ventures• Capricorn• CEVG• DBL Partners• Finistere Ventures• GE Ventures• Greatpoint Ventures• MNL Partners• Prelude Ventures• Roda Group
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There are three options for philanthropists to support PRIME docket companies on a deal-by-deal basis**
PHILANTHROPIC INVESTOR
PRIME(501c3 public charity)
DOCKET COMPANY
Recoverable Grant or LoanPHILANTHROPIC
INVESTOR
Convertible Note/Equity*Terms determined on a deal-by-deal basis
10-15% annual interestReturns at exit
Subordinated to preferred
Grant
PHILANTHROPIC INVESTOR
No expectation of financial return
*If you are investing from a grant-making foundation and would like to classify this transaction as a program-related investment (PRI), PRIME can provide documentation
and/or time with our nonprofit attorney to help establish “charitability”
Recoverable Grant
(**By design, PRIME is not financially remunerated in any of these scenarios)
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Quidnet
RedWave
ConnectDER Rebound
Anfiro
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Quidnet
RedWave
ConnectDER Rebound
Anfiro
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Quidnet
RedWave
ConnectDER Rebound
Anfiro
Proof-of-concept investments
membranes that reduce the cost and energy of desalination and water treatment
converts waste heat to electricity at low cost and high efficiency
ultra-low-cost grid storage
Sept 2017
reinventing refrigeration with a novel cooling cycle
meter collar that enables solar and other renewable resources to connect to the grid cheaply, safely, and rapidly
July 2017
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electrifying commercial aviation
Wright Electric
ultra-high-efficiency, low-cost solar material
